* FTSEurofirst 300 index closes 0.3 percent higher
* Miners among top gainers as metals prices rebound
* Novo Nordisk surges 9 percent on setback for rivals
By Atul Prakash
LONDON, Oct 20 (Reuters) - European shares bounced back to finish higher on Wednesday, led by strength in mining and automobile stocks, though massive UK government spending cuts capped gains.
The FTSEurofirst 300 index of top European shares finished 0.3 percent higher at 1,086.48 points after hovering in a tight range of 1,079.42-1,087.72 points. The index is up about 4 percent so far this year.
Miners were among the top gainers, tracking firmer metals prices, which took strength from a weaker dollar after tumbling on Tuesday in response to a rise in Chinese interest rates. Anglo American, BHP Billiton and Xstrata rose 2.5 to 3.4 percent.
Economic concerns remained uppermost in analysts' minds.
"You have got the U.S. Federal Reserve ... looking as if they will come in with quantitative easing (QE), but if they don't do enough QE, the market will be disappointed. The most important thing is how economic numbers develops," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
Figures showed U.S. mortgage applications slumped last week as interest rates on 15- and 30-year fixed-rate mortgages rose for the first time in six weeks.
The market got some support in the morning session after the release of the minutes of a meeting of the Bank of England, which reinforced expectations the central bank is edging towards further quantitative easing.
But caution returned after Britain said it would cut half a million public sector jobs, raise the retirement age and slash the welfare state as part of the biggest spending cuts in a generation.
AUTOS RACE HIHGER
Automakers were in demand. Their reliance on emerging markets showed as PSA Peugeot Citroen raised its operating income goal on brisk sales in new markets and Audi celebrated its millionth car sale in China. Peugeot rose 0.9 percent, while Daimler AG, Porsche and Renault gained 1.6 to 2.2 percent.
The Euro STOXX 50, the euro zone's blue-chip index, rose 0.5 percent to 2,851.52 points.
Raghee Horner, chief market analyst at Autochartist, said the index continued to consolidate within 2,819 points and 2,867 points in the past sessions and had done little to correct or advance the current uptrend. She saw support above 2,800 and hesitation below 2,880 points.
"With the MACD histogram showing that momentum is still maintaining its bullishness, the STOXX 50 seems to still be struggling with selling pressure at the August 5 high at 2,849," she said, referring to Moving Average Convergence Divergence technical analysis.
Among individual movers, Novo Nordisk surged 9 percent after U.S. health regulators declined to approve a diabetes drug being developed by rivals Amylin Pharmaceuticals and Eli Lilly. That boosted prospects for Novo's key new product hope Victoza.
Across Europe, the FTSE 100, Germany's DAX and France's CAC 40 rose 0.4 to 0.6 percent. (Additional reporting by Blaise Robinson in Paris and Harpreet Bhal in London; Editing by Will Waterman)